Wells Fargo & Co., the United States’ biggest home lender, halted some foreclosure sales until it can understand new federal guidelines on seizures.
The new rules from the Office of the Comptroller of the Currency, dated last month and sent to the nation’s large and mid-sized banks, laid out minimum standards that a bank must meet before it can sell a foreclosed home, according to the agency. Citigroup Inc. also said Friday that it’s evaluating the Comptroller Office’s directive.
The firm needs the pause “while we study the revised guidance from the OCC regarding imminent foreclosure sales,” Vickee Adams, a spokesman for San Francisco-based Wells Fargo, said Friday in a phone interview. “We expect it to be brief,” she said, declining to specify which states were affected.
Mortgage firms have previously imposed moratoriums amid reports that borrowers were incorrectly thrown out of their homes.
Complaints pushed the five largest firms to sign a $25 billion settlement last year that ended a probe of their practices.
The impact of the new halt may be muted, with U.S. mortgages that are overdue or in foreclosure standing at a four year low, according to data released May 9 by the Mortgage Bankers Association.
Bank of America Corp. didn’t suspend foreclosure activity, said Dan Frahm, a spokesman for the Charlotte, N.C.-based lender. “We manage our mortgage-servicing operations in compliance with all laws, regulations and standards for sound business practices,” Frahm said.
Spokesmen for JPMorgan Chase & Co. and U.S. Bancorp didn’t immediately respond to requests for comment.
American Banker, which reported on the halt earlier Friday, said JPMorgan had already resumed normal volume.
“We are in the process of complying and following the directive set forth in the OCC guidance,” Liz Fogarty, a spokes-man for New York-based Citigroup, said in an e-mailed statement.
The Comptroller’s Office posed 13 questions that must be considered before banks sell homes, such as ensuring the loan’s delinquent status is correct and that other remedies have been considered. The review must be conducted for any sale planned within 60 days, according to the document.
“The purpose of this guidance is to ensure that borrowers will not lose their homes without their files receiving pre-foreclosure sale reviews conducted under the standards listed,” according to the April 19 document.
If any of the answers to the questions raise concern, the scheduled sale must be canceled or delayed, the OCC said. The Federal Reserve released similar guidance April 23.
“The OCC did not direct a slowdown or pausing,” Bryan Hubbard, a Comptroller’s Office spokesman, said in an e-mailed statement. “If servicers are not certain they are meeting these standards, pausing foreclosures is a responsible and productive step.”
Mortgage servicers handle billing and collections on behalf of lenders or investors who own the loans, and oversee foreclosures.
Business, Pages 31 on 05/18/2013